UnThreaded | Threaded | Whole Thread (2) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75335  
Subject: Re: IRA funds in estate Date: 2/24/1998 6:17 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Greetings, Sully, and welcome.

<<This is a very basic question, but what happens to IRA funds when the owner dies? I assume it becomes part of the estate but how is it treated for tax purposes?>>

At death, the market value of the IRA is included in the owner's estate for estate taxation purposes. It is also subject to income taxation on receipt by the beneficiaries. No 10% early withdrawal penalty applies, but the distribution to those beneficiaries will be taxed. In general, a spousal beneficiary may treat the IRA as his/her own and the proceeds won't have to be distributed or taxed until that spouse elects to take the money. Other beneficiaries must take the money and pay tax. They can take it in annuity form payable over their life expectancy. If they don't do that, then they must take it all by the fifth anniversary of the owner's death. Proceeds are taxed to the beneficiary at the beneficiary's rate when received.

Regards......Pixy
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (2) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement